Mandatory arbitration can result in troops' homes going into foreclosure. (Shutterstock)

(Newser)
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Deployed service members are supposed to be protected by federal laws from repossession and foreclosure. But thanks to mandatory arbitration—a clause in a contract's small print that waives one's right to court intervention—lenders are circumventing the rules, placing the homes and cars of US troops in jeopardy, the New York Times reports. And while banks argue it's a more cost-efficient way to take care of problems and stave off frivolous lawsuits, military members say it violates the Servicemembers Civil Relief Act, designed to protect troops from the repo man and foreclosure when they're overseas. Arbitration often favors the lenders.

A bipartisan bill was on the table last year to help military members escape the arbitration black hole, but it was met by resistance from the US Chamber of Commerce and SIFMA, a group made up of lenders who often tout their support of the military, the Times notes. "While we remain very supportive of the troops, we see no empirical or other evidence that service members are being harmed by or require relief from arbitration clauses," a SIFMA counsel member said in a statement. Charles Beard, a service member whose car repossession was documented in the Times article, probably disagrees: While he was in Iraq, repo men went to his California home and took his car keys from his wife—without a court order.